Lincoln National holds a secure capital position, fair liquidity
and improved financial leverage that aid incremental capital
deployment, reflected by 25% dividend hike. The divestment of LFM
will further lift financials. Its third-quarter earnings outpaced
the Zacks Consensus Estimate driven by higher account balances
across segments, premiums and fees. These drove double digit
revenue growth. Higher new business returns from strong
distribution network and expanded product portfolio also boosted
results. Improved investment portfolio coupled with higher
retention and pricing also enhanced ROE and book value. These were
partially offset by higher expenses as well as reduced net flows
and deposits. Economic volatility, competition and low interest
rate environment also restrict desired upside. We retain our
Founded in 1904 and headquartered in Philadelphia, Pennsylvania,
Lincoln National Corporation is a diversified life insurance and
investment management company. Operating under the Lincoln
Financial Group name, the company's primary subsidiaries are
Lincoln National Life Insurance Company (LNL), First Penn-Pacific
Life Insurance Company, Lincoln Life & Annuity Company of New
York, Delaware Management Holdings Inc., Lincoln National (UK) Plc,
Lincoln Financial Advisors (LFA), and Lincoln Financial
Lincoln National engages in multiple insurance and retirement
businesses in the U.S., which include fixed and indexed annuities,
variable annuities, universal life insurance (UL), variable
universal life insurance (VUL), linked-benefit UL, term life
insurance, mutual funds and group life insurance. The company also
provides employer-sponsored fixed and variable annuities and mutual
fund-based programs single and survivorship versions of UL and VUL,
including corporate-owned UL and VUL and bank-owned UL and VUL
products to small- and mid-sized banks and large-sized corporations
and group non-medical insurance products that are principally for
term life, disability and dental. Lincoln National distributes its
products through a range of intermediaries, including financial
advisors, consultants, brokers, banks, wire houses, planners, third
party administrators and other intermediaries. As of Dec 31, 2013,
the company had 9,115 employees. In addition, a total of 1,424
planners and agents had active sales contracts with either of its
The company provides products and services in three operating
businesses, which are as follows:
Annuities: focuses on offering tax-deferred investment growth
and lifetime income opportunities for its clients via fixed
(including indexed) and variable annuities. These contracts provide
payout alternatives for a steady income flow for life. This segment
accounted for 27% of the total operating revenue in 2013.
Retirement Plan Services: (formerly known as Defined
Contribution) focuses on investment and asset management services
for retail and institutional clients by offering wealth creation,
protection, and retirement planning products and services via
mutual funds, defined benefit and defined contribution plans along
with individual retirement account (IRA) markets. This segment
accounted for 9% of the total operating revenue in 2013.
Life Insurance: focuses on creation and protection of clients'
wealth through an array of life insurance products such as term
insurance, linked-benefit product (UL policy linked with riders
that provide for long-term care costs) along with both single and
survivorship versions of UL and VUL, including COLI and BOLI
products. This segment accounted for 42% of the total operating
revenue in 2013.
Group Protection: focuses on providing group non-medical
insurance products such as term life, disability and dental, to the
employer marketplace through various forms of contributory and
non-contributory plans. The segment accounted for 18% of the total
operating revenue in 2013.
Others: primarily focuses on the financial data for operations
that are not directly related to the business segments and other
unallocated corporate items. The segment accounted for 4% of the
total operating revenue in 2013.
Following a stronger foothold in the life insurance and annuity
arena, Lincoln National has been growing into other lines of
business to diversify its operations. In addition, the company has
disposed of its less profitable businesses or business lines in
order to strengthen its asset management operations, such as
pension plans, trusts and mutual funds. The operations were
enhanced in 2006 with the acquisition of Jefferson Pilot. In 2009,
Lincoln National sold its UK-based subsidiary and Delaware
Management Holdings, Inc. to shore up the capital base of its core
U.S. businesses. No acquisitions or divestments were made in 2010,
2011 and 2012.
In Jul 2009, Lincoln National successfully completed a
comprehensive capital plan (CCP) that included reduction in the
common stock dividend, disposal of certain subsidiaries and
issuance of common stock and debt. Steps were taken to strengthen
the capital position of its principal insurance subsidiaries and
provide liquidity to its holding company amid economic
In Oct 2013, Lincoln National entered into a reinsurance treaty
to cover the new sales of its flagship variable annuity guaranteed
living benefit product. Per the deal, Lincoln National will offer
50% coinsurance on new living benefit guarantee sales up to $8
billion through Dec 31, 2014.
As of Sep 30, 2014, Lincoln National had assets of $248.5
billion, long-term debt of $5.19 billion and total shareholders'
equity of $15.45 billion.
Lincoln National Corp. (LNC): Read the Full
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